Archroma Pakistan: Lower sales volume hurts profitability

MG News | July 28, 2020 at 03:49 PM GMT+05:00

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July 28, 2020 (MLN): Archroma Pakistan Limited (ARPL) has unveiled its financial results for the nine months ended June 30, 2020, as per which the company has posted its profit after tax of Rs 783 million (EPS: Rs 22.96) i.e. 29.35% lower than the net profits of Rs 1.108 billion (EPS: Rs 32.50) of the corresponding period last year.

During the period, the decline in earnings seen in the financial results below is a result of lower volumetric sales, down by 10.64%, despite a 6.29% decrease in the cost of goods sold, shrinking gross margins from 31% to 28%.

On the cost front, the administrative expenses jumped by 16.05% while a decrease in distribution & marketing expenses and impairment loss on trade debts by 6.31% YoY and 91% YoY respectively contributed to support the financial stability of the company.

Moreover, the other income of the company increased by around 41%. Meanwhile, finance cost went down by 42.5% YoY to Rs 407 million, providing the cushion to its earnings.

Financial Results for the nine months ended June 30, 2020 ('000 Rupees)
	Jun-20	Jun-19	% Change
Net sales	11,584,956	12,964,213	-10.64%
Cost of goods sold	(8,383,027)	(8,945,435)	-6.29%
Gross profit	3,201,929	4,018,778	-20.33%
Distribution and marketing expenses	(1,242,651)	(1,326,404)	-6.31%
Administrative expenses	(425,923)	(367,027)	16.05%
Impairment loss on trade debts	(13,193)	(143,752)	-90.82%
Other expenses	(83,057)	(107,780)	-22.94%
Other income	15,577	11,009	41.49%
Operating Profit	1,452,682	2,084,824	-30.32%
Finance cost	(407,196)	(708,489)	-42.53%
Profit before taxation	1,045,486	1,376,335	-24.04%
Taxation - net	(262,024)	(267,372)	-2.00%
Profit for taxation	783,462	1,108,963	-29.35%
Earnings per share - basic and diluted (Rupees)	22.96	32.50	-29.35%

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